Gasoline Rationing Plan Starts

(Wikipedia) - 2007 Gasoline Rationing Plan in Iran was launched by president Mahmoud Ahmadinejad's cabinet to reduce Iran's fuel consumption. Although Iran is one of the world's largest producers of petroleum, rapid increases in demand and limited refining capacity has forced the country to import about 40% of its gasoline, at an annual cost of up to $7 billion.The fuel rationing originally triggered discontent in Iran, but, according to analysts quoted in the Western news media, the Iranian government is hoping that reducing gasoline imports will help insulate the country from international pressure related to its nuclear program. "We will greatly suffer if they (foreign countries) suddenly decide not to sell us fuel," said Iranian political analyst Saeed Leylaz. "Fuel rationing is a security-economic decision to reduce fuel consumption." In an interview Iranian president Mahmoud Ahmadinejad said: "They had a plan and idea that is neutralized. They don't know our nation. They think if they refuse to provide us with gasoline, our nation would say we don't want nuclear energy."An increase in population since 1980 from 40 to 68 million people pushed Iran’s gasoline consumption up by nearly 13 percent annually over the previous five years. As a result the country consumed far more gasoline than its refineries could provide. Production stood at 40,000 m3 a day, compared with daily demand standing at 70,000 m3. With 43 percent of its gasoline imported, Iran was the world’s second largest gasoline importer.Iran's petrol was heavily subsidized, sold at about a fifth of its real cost. The price of 1,000 Rials ($0.11) per liter made Iran one of the cheapest countries in the world for motorists. The government maintained that the rich benefit from 70 percent of subsidies and that it is one of the primary reasons for changing the subsidies system.Iran took action to reduce its dependence on foreign gasoline through a three-pronged strategy which includes: Significant expansion of Iran’s refining capacity Securing gasoline imports from friendly allies Reducing the use of gasoline Development of the public transport systemA special committee set up by the government came up with a four-point program which includes: Conversion of most existing cars to run on natural gas within five years at a rate of 1.2 million annually. This will begin with conversion of 600,000 public and governmental cars to NGV. Phase out of very old cars (approximately 1.2 million) by 2010. As of June 2007, most of the newly manufactured cars will have to be able to run on natural gas. Within five years most of Iran’s 10,000 refueling stations will be retrofitted to serve natural gas.The Iranian government provides incentives to CNG car buyers and has meanwhile decreased the gasoline subsides. It must be noted that Iran is the Middle East's leading car manufacturer. In 2005 Iranian automakers produced nearly one million vehicles including 884,000 passenger cars and 104,000 heavy vehicles, altogether worth $11.6 billion. The Iranian government aims to have most of Iran’s cars running on natural gas by 2015.The restrictions began at midnight local time on Wednesday 27 June, 2007, Tuesday and were set to continue for four months. The rationing system, allowed private drivers only 100 liters of fuel per month at the subsidized price. Taxis get 800 liters a month. Anything more than that will have to be bought at a higher price, which officials say will be announced within the next two months. The fuel rationing has triggered widespread discontent in Iran, but it succeeded in reducing the amount of imported gasoline which rendered US–EU sanctions obsolete.Based on the current rationing plan, each private car receives 120 liters per month at about 10 cents per liter. Currently, the price for non-rationed gasoline is almost 40 cents (Nov. 2008).Prices in neighboring countriesIn mid-November 2008, the prices of super gasoline in the neighboring Afghanistan, Armenia, Azerbaijan, Pakistan, Turkey and the UAE were 105, 108, 74, 84, 187 and 45 cents per liter. Whereas, in Iran motorists are allowed 100 liters of gasoline each month at the subsidized price of about 10 cents per liter and an unlimited amount at 40 cents per liter .According to Iranian counter-smuggling authorities, 17 percent of daily fuel production equivalent to some 40 million liters were being smuggled out of the country every day in 2009. This is while most of the smuggling concerns gasoline and diesel fuel, whereas Iran imports both of these to the tune of 30 million liters every day. Smugglers are using "lakes of fuel", underground pipelines to neighboring countries and oil tankers on the Arvand Rood waterway. Facilities such as the Martyr Rajayi Port Complex in Hormozgan Province were reportedly used by smugglers within the state to export state subsidized gasoline outside the country. Fuel smuggling increased by 232 percent compared to last year's figures. Iran says its naval security forces have confiscated ten oil tankers smuggling 4,600 tons of Iranian fuel out of the Persian Gulf in 2008. As of 2012, smuggling to Pakistan and Afghanistan continues unabated because of price differential with these countries. According to the Iranian Police Chief, before the implementation of the subsidy reform plan, 20 million liters of fuel were trafficked out of the country daily. Now about one million liters of fuel is trafficked out of Iran every day despite increased domestic fuel prices caused by the Iranian targeted subsidy plan.In June 2009, Oil Ministry announced that Iran has so far saved $8.5 billion through the nationwide fuel rations program. Regarding the fuel rationing program, if the plan had not been executed, Iran would have had to import 33 million liters of gasoline per day in 2007-8 and 44 million liters in 2008-9. With the implementation of the plan these figures reduced to 18.9 million liters and 21.6 million liters per day, respectively.By July 2010, Iran had managed to save 11 billion dollars since the rationing began, thanks to the gasoline rationing plan, which has spared the need for excessive imports of the commodity. In June 2010, it was announced that after the implementation of the new subsidy reform plan, gasoline will be sold on "free market price".Currently (June, 2012), each car receives 60 liters per month at the price of 4000 Rials and drivers have to pay 7000 Rials to buy gasoline at the free market price.